Small Business Web Hosting

Web Hosting Benefits and Risks

Perhaps fearing such a cost boom, many businesses seem reluctant to make a similar move. "While web hosting is a widely discussed option for the SME marketplace, the fact of the matter is that very few SMEs are relying on it," says Charles Tang, Asia–Pacific business and marketing director for CNET Direct. "We’ve recently conducted an intensive IT audit of approximately 2,000 SMEs across Australia and across multiple industries. This revealed that on an overall basis, only 7.8 percent of organisations in this sector are relying on outsourced web hosting or storage management." That decision is not particularly influenced by business size.

"If anything, larger organisations with more than 100 employees are less likely to outsource web hosting and storage and rely on their own IT resources," Tang says. "Generally, the feedback that we’ve received is that SMEs have still to be convinced of the benefits of external vendors regarding cost, efficiency and ROI." Despite that reluctance, there a number of clear indicators as to when a business should consider making the move to hosting. "The trigger event usually is a new application and how mission critical that is to people’s business," says Greg Thomson, executive director for hosting and security at Macquarie Telecom. "Why tie up cash and real estate and investment in building your own data centre?" "The main benefits are better access to security and larger connection pipes, as well as access to more reliable and better supported enterprise hardware and software," says Anoosh Manzoori, managing director of SmartyHost.

Ensuring security is one critical consideration. "The technology for hosting websites in-house is easily available and not expensive, but it is not necessarily a good idea," says Lisa Harvey of IT consultancy, Energetica. "Hosting your website means opening your server and network up to the internet. Unless you know what you are doing there is significant security risk in this." "Running your own setup means doing virus management and patch management, all of those things you’ve got to be very methodical about," Thomson says. "How do you get the right skill set for that? One of the big challenges in the IT space, still, is developing and training people. Technology is going to continue to change rapidly, and how you leverage specialist resources and focus on core competency to grow your own business will be critical." Reliability is also a major consideration. "Data centres are built specifically for hosting purposes and can afford several high-end backup solutions, whereas if you host internally you create a single point of failure," Manzoori says. "For example, even a simple power failure at 2am could kill your server, your data, and consequently your business."

Calculating R.O.I.

"Hosted services can remove a great deal of the cost, pain, and risk of managing IT in-house," Harvey says. "These services are usually based on a monthly fee, and can include software licensing. The cost will vary according to how much work you do yourself, what kind of service requirements you have, and how much work you are outsourcing."

Unsurprisingly, hosting providers argue that cost benefits apply regardless of size. "If a business is only after a place to host a brochure site, it is much more economical to host externally than to carry the cost of the servers in their own office," Manzoori says.